Notes

Basis of preparation  

The reviewed interim condensed consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements and the requirements of the Companies Act of South Africa. The Listings Requirements require interim reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards ("IFRS") and the South African Institute of Chartered Accountants Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting.

The accounting policies applied in the preparation of the reviewed interim condensed consolidated financial statements are in terms of IFRS and are consistent with those applied in the previous consolidated annual financial statements. These results have been prepared under the supervision of the Chief Financial Officer, Mr B G Wood.

New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of these reviewed interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 30 June 2022, except for the adoption of new and amended IFRS and International Financial Reporting Interpretations Committee interpretations which became effective during the current review period. The application of these standards and interpretations did not have a significant impact on the Group's reported results and cash flows for the six months ended 31 December 2022 and the financial position at 31 December 2022.

There are no material contingent assets or liabilities at 31 December 2022.

Capital commitments (Rand millions)	31 December  2022		31 December  2021	30 June  2022
– Contracted	202		327	256
– Authorised but not contracted for	325		150	229
Total	527		477	485

Capital commitments will be funded by cash generated by operations.

The Group does not fair value its financial assets or liabilities in accordance with quoted prices in active markets or market observables, as their carrying value approximates fair value due to the short-term nature of these items and/or existing terms are equivalent to market observables. There were no transfers into or out of Level 3 during the period.

During the 2014 financial year, the Group implemented a share incentive scheme for all employees of the Group and its franchisees that had been in the employ of the Group and/or franchise network for a period of three uninterrupted years at each allotment date in August every year from implementation date. As a result, 3,0 million of the Group's shares net of forfeitures were held by qualifying staff members at 31 December 2022 (2021: 7,2 million). Until vesting, the shares will continue to be accounted for as treasury shares and have an impact on the diluted weighted average number of shares

The seventh allotment of shares in the scheme, granted in 2019, vested on 31 August 2022. A total of 151 employees qualified for the vesting (2021: 104), of which two employees opted to retain the shares (2021: three) and the balance received the net value of the awards in cash. This resulted in a decrease in treasury shares of 1 693 135 (2021: 1 163 757) shares.

The scheme is classified as an equity settled scheme in terms of IFRS 2, Share-based Payment, and has resulted in a charge of R3,5 million (2021: R7,1 million) to the Group's income.

	Reviewed  six months to  31 December  2022		Reviewed  six months to  31 December  2021	Audited  year to  30 June  2022
Reconciliation of shares in issue (all figures in millions):
– Total number of shares issued	1 322		1 322	1 322
– Shares held by Share Incentive Trust	(10)		(10)	(10)
– Shares held by Retention Trust	(8)		(9)	(8)
– Black economic empowerment treasury shares	(64)		(65)	(65)
– Shares held by Italtile Ceramics Proprietary Limited	(32)		(21)	(25)
Shares in issue to external parties	1 208		1 217	1 214
Reconciliation of share numbers used for EPS calculations (all figures in millions):
Weighted average number of shares	1 214		1 217	1 217
Dilution effect of share awards	2		4	4
Diluted weighted average number of shares	1 216		1 221	1 221
Reconciliation of headline earnings (Rand millions):
– Profit attributable to equity shareholders	965		1 022	1 850
– Profit on sale of property, plant and equipment – after taxation	(3)		(1)	(1)
– Impairment of plant and equipment – after taxation	–		–	2
Headline earnings	962		1 021	1 851
Headline EPS (cents)	79,2		83,9	152,1
Diluted headline EPS (cents)	79,1		83,6	151,5
Dividends per share (cents)	32,0		34,0	61,0
Net asset value per share (cents)	620,6		543,0	575,0

No adjustments to earnings are required for diluted earning per share calculations, as the share awards do not have an impact on diluted earnings.

	(Rand millions unless otherwise stated)
	Reviewed six months to 31 December 2022		Reviewed six months to 31 December 2021	Audited year to 30 June 2022
Turnover#	4 956		4 801	8 981
– Retail	2 906		2 855	5 349
– Manufacturing	1 778		1 719	3 052
– Supply and support services	272		227	580
Royalty income from franchising	67		67	153
Other franchise income	47		46	61
	5 070		4 914	9 195

#	Turnover represents net revenue from sale of goods, excluding value added tax and intercompany sales.

			(Rand millions unless otherwise stated)
			Reviewed six  months to  31 December  2022		Reviewed  six months to  31 December  2021	Audited  year to  30 June  2022
Cash flows from operating activities:
Profit before taxation			1 368		1 488	2 700
Adjusted for:
	Income from associates		(1)		–	(7)
	Depreciation		200		175	369
	Depreciation – right-of-use asset		36		37	69
	Finance cost – lease liability		16		16	29
	Profit on sale of property, plant and equipment		(4)		(1)	(1)
	Impairment of property, plant and equipment		–		–	2
	Finance income		(25)		(18)	(39)
	Finance costs (excluding lease liability finance costs)		22		11	34
	Share-based payment expenses		39		50	75
	Foreign currency translation difference		9		(11)	(8)
	Working capital changes:
		Inventory	(76)		79	(122)
		Trade and other receivables	(81)		(82)	(42)
		Trade and other payables (including provisions)	151		(129)	(183)
	Cash generated by operations		1 654		1 615	2 876

In the prior financial period, an interest-bearing loan of R500 million was repaid in full on 29 November 2021 using the proceeds of another R500 million loan from another financial institution. This loan is repayable in November 2024 and has thus been disclosed as a non-current liability at 31 December 2022.

In November 2022, a revolving credit facility of US$3,5 million was refinanced resulting in the non-current classification of this utilised facility as at 31 December 2022 (as the facility is repayable in November 2025).

On 28 November 2022, Four Arrows Investments 256 Proprietary Limited ("Four Arrows") submitted a formal written offer to the Group to sell its remaining 6,7 million Italtile Limited shares back to the Group. The offer price was set in accordance with the terms of a Preference Share Agreement signed in 2007 and equated to R11,51 per share (the Italtile 10-day VWAP immediately preceding the date of receipt of the offer).

In accordance with specific approval granted by Italtile shareholders in July 2007, the Board approved the repurchase and the shares were subsequently repurchased from Four Arrows on 14 December 2022 for a total consideration of R77 million and are held as treasury shares by a subsidiary of the Group which was nominated by Italtile to conclude the transaction.

The founder and non-controlling shareholder in Ezee Tile Adhesive Manufacturers Proprietary Limited ("Ezee Tile"), Mike du Plessis, retired with effect from 30 June 2021. As a result, the Group acquired his shareholding in Ezee Tile for R120 million during July 2021 increasing the Group's stake in this company to 98,29% in the prior period.

Awards issued in accordance with the Ceramic Industries Escrow Scheme (a retention scheme) and which vested on 31 December 2020, resulted in a cash outflow of R99 million from the Group during the prior period as vested shares were acquired from participants. This acquisition of the vested retention shares has increased the Group's effective holding in Ceramic Industries to 98,06% in the prior period.

During the civil unrest in July 2021 experienced in Gauteng and KwaZulu-Natal ("KZN"), the Group closed all of its 18 stores in KZN for 10 days, as well 16 stores in other hotspots for shorter periods of time. Although trade was disrupted and two of the Group stores looted, the Group was fortunate to not experience material loss during this time.

The directors are not aware of any matters or circumstances arising since the end of the reporting period which significantly impact the financial position at 31 December 2022 or the results of its operations or cash flow for the period then ended.